Morrisons has launched a major restructure of its business after announcing a loss for the year to February 2014.

In its preliminary results for the year ended 2 February, the retailer revealed that it made a loss before tax of £176m, compared to a profit of £879m in 2012-13.

Underlying profit before tax fell 13% to £785m (compared to £901m in 2012/13), while like-for-like sales were down 2.8% (compared to a fall of 2.1% in 2012/13).

The retailer revealed details of a new strategy as it announced the results, designed to counter competition from the discounters, with investment in lower prices. The company also plans to step up its expansion into online and convenience channels and will exit from non-core activities, including online baby products business Kiddicare and US online retailer Fresh Direct.

Disappointing year

Commenting on the results, Sir Ian Gibson, chairman, said: “In trading terms this has been a disappointing year for Morrisons, with consumer confidence and market conditions continuing to be challenging. It has, however, been a period of significant strategic progress as we lay the foundations for a stronger future. Our financial position remains strong.”

Dalton Philips, chief executive, added: “The strategy we are announcing today is a bold and comprehensive response to the fundamental structural changes that are taking place in grocery retail. We are significantly reducing our cost base and will invest £1bn into our proposition over the next three years, to improve our value even further and to defend and strengthen our competitive position. Customers will see this in our stores, as well as in our fast-growing online and convenience offers. At the same time we will exit non-core activities, significantly reduce our capital expenditure and deliver improved operating cashflow and return on capital employed.”